B of I aims to get mortgage customers to switch to fixed rates

The mortgage rate stand-off between Minister for Finance Michael Noonan and the banks, which promised much for homeowners, has yet to deliver meaningful cuts on standard variable rate mortgages. AIB has made some effort to cut its rate, knocking 25 basis points – a quarter of 1 per cent – off its variable rate in early May, but Bank of Ireland has yet to budge.

However, the bank has made some concessions by announcing a raft of cuts at the end of May. Since then, it has been ringing its mortgage customers to see if they are interested in switching to one of its new lower rates – fixed, of course, but tempting nonetheless for customers paying an over-the-odds variable rate of up to 4.6 per cent.

Someone on a €300,000 mortgage with a loan-to-value today of less than 80 per cent for example, could save a hefty €174 a month, or more than €2,000 a year, by switching to a fixed rate of 3.6 per cent. A tempting offer indeed.

As the bank said when it was announcing its new rates: “For every variable rate customer, there is a competitive fixed rate which could save them money.” Of course, with the political pressure continuing, it is always possible that the bank will eventually capitulate and take the scalpel to its variable interest rate.

By then, though, it might find that most of its long-suffering standard variable rate customers have locked themselves in to a fixed rate. Convenient that.